How long is too long? Don۪t pause for thought on forfeiture

A landlord under a lease (either residential or commercial) is generally entitled to forfeit a lease[1]. Forfeiture has always been seen as a draconian measure and one that the court of equity as long ago as the late 17th century regularly intervened in to grant relief from forfeiture where the breach was for non-payment of rent.

Relief from forfeiture for other breaches of leases (for example wilful breaches by subletting without consent or other breaches of covenant) was not part of the court’s equitable jurisdiction until 1973. The concept of relief from forfeiture has changed considerably since the earliest reported case in 1681, and it continues to do so with the concept receiving not an inconsiderable amount of judicial interpretation in recent years. So where are we now?

Forfeiture

There are two routes to a landlord forfeiting a tenant’s lease being:

1. By proceedings (court claim for possession of the property); or
2. By peaceable re-entry (unequivocal act bringing to an end the lease and the landlord and tenant relationship).

The two routes to forfeit a lease then bring about differing routes and timescales for relief from forfeiture:

1. Where the forfeiture is by proceedings, a tenant can apply for relief at any time during those proceedings and up until enforcement of a possession order (i.e. when the landlord re-enters the premises pursuant to a court order)
2. Where the forfeiture is by peaceable re-entry, the time limit for relief from forfeiture is six months from the date of the re-entry (under section 210 of the Common Law Procedure Act 1852 and section 138 of the County Court Act 1984).
3. After the six month time limit under statute, the court still retains an equitable jurisdiction to grant relief from forfeiture, and courts will generally use the statutory time limit as a guideline.

The last route to relief from forfeiture is the riskiest, there are no set rules to the court’s equitable jurisdiction. Previous case law has varied on what time frame is equitable and what delay is unacceptable:

• In Thatcher v C.H. Pearce & Sons (Contractors) Ltd a period of six months and four days was allowed, in circumstances where the tenant was in prison during the relevant period;
• In Vision Golf Ltd v Weightmans (a firm) considered the impact of delay in an application for relief from forfeiture in the context of a professional negligence claim against a firm of solicitors. Lewison J went on to say (albeit obiter) that “A few days is not a few weeks”.
• In Pineport Ltd v Grangeglen Ltd Chief Master Marsh considered a claim for relief from sanctions in the context of a long lease granted at a premium and when the claim was issued 14 months after the re-entry. “I have to consider whether it can be said that the application was made with “reasonable promptitude” taking into account the six month period as a guide and having due regard to it. The discretion to grant relief is a broad one and I am not constrained by a fixed time limit which prevents the court from granting relief. Reasonable promptitude is an elastic concept which is capable of taking into account human factors, including those I have mentioned. Although 14 months is more than double the guide period of 6 months (and near to the breaking point for the concept’s elasticity), I am satisfied that it would be wrong to bar the Claimant from obtaining relief in the circumstances of this case. In light of the evidence I am able to conclude that the application was made with reasonable promptitude”.

How Prompt is “Reasonable Promptitude”?

As Chief Master Marsh set out equity’s discretion is unfettered, but it is not an absolute discretion. Simply put, there is a time limit, but that time limit is uncertain, and it would appear from Pineport, where our Edward Thompson was instructed, that the limit may extend to 14 months.

But in a recent decision of Gibbs v Lakeside Developments Ltd, (in obiter comments restating the law on relief from forfeiture) Lewison LJ said in specific reference to the case of Pineport v Grangeglen:

“In the result the Chief Master granted relief, referring to a variety of "human factors" including the depression of the main human actor, the lack of specialist advice, the existence of a restraint order and the consequent lack of money with which to pay the arrears.

I have considerable doubts whether the Chief Master was right to decide that case in the way that he did.”

Claims for relief from forfeiture are therefore extremely time sensitive; be that as it may, there may be some discretion beyond the six months statutory limit in equity’s discretion. Given the comments in Billsom and Gibbs it would only be prudent to assume that Lewison LJ views the elasticity as a few days rather than a few weeks. Anyone seeking to rely on Grangeglen does so precariously, and it doesn’t appear to create a sea change in how quickly a tenant must act to be relieved from forfeiture. In fact quite the opposite may be the case that the Pineport decision may well have been overturned on appeal, but that decision will be for another day (not week).

Edward Thompson of Battens Solicitors has been involved in several high profile reported cases of relief from forfeiture and illegal re-entry, if you have any questions or queries in relation to forfeiture of commercial or residential leases, contact Edward on Edward.thompson@battens.co.uk

1] Subject to certain conditions on residential premises and an enforceable re-entry or forfeiture clause